Volume: higher
Price: Steady
Spot Polypropylene prices waffled this past week, much as they have during most of August. The spot market however, did make a quick $.01/lb gain around the beginning of the month in response to an early $.015/lb higher Propylene monomer settlement for August contracts. The market tried to gain momentum a couple of times, but has really gone nowhere. Given the last year's correlation, it is not too far of a stretch to predict Polypropylene contracts to settle on average $.015-.02/lb higher in August.
There is another $.03/lb price increase floated for September, but since Polypropylene prices have been closely tied to Propylene monomer costs, let us first take examine spot RGP activity after the early $.015/lb higher August settlement. Spot RGP prices have steadily moved lower throughout the month, now down about $.03/lb. So since at least spot monomer prices have begun to ease, might we see actually see lower Polypropylene prices ahead? It looks like it could happen.
The market could sure use the relief. Polypropylene sales have struggled around this key $.60/lb level of resistance. Even with a weak dollar, spot export sales cannot handle the price. While Polypropylene producers have been able to maintain their production margins, it has not really been a good market for either side: high monomer costs, high resin prices and weak domestic demand.
For several months, the monomer market has been teetering near its recent highs, appearing to be ready for a break. For this reason, buyers have been cautious, so there is not a huge amount of Polypropylene inventory throughout the supply chain. This also means that buyers do not have much bargaining power when looking for spot resin; they pretty much need to pay the asking price.
It seems however to look a bit more like a buyer's market developing. We are starting to see rail car offerings stick around longer than usual. Traders with inventory might be the best indicator because they are now shying away from new purchases and selling what they can.
Monomer contracts have been settling very early for the past several months. After this week plays out and the next begins, we should have a pretty good idea on the direction of the September Polypropylene market.
Price: Steady
Spot Polypropylene prices waffled this past week, much as they have during most of August. The spot market however, did make a quick $.01/lb gain around the beginning of the month in response to an early $.015/lb higher Propylene monomer settlement for August contracts. The market tried to gain momentum a couple of times, but has really gone nowhere. Given the last year's correlation, it is not too far of a stretch to predict Polypropylene contracts to settle on average $.015-.02/lb higher in August.
There is another $.03/lb price increase floated for September, but since Polypropylene prices have been closely tied to Propylene monomer costs, let us first take examine spot RGP activity after the early $.015/lb higher August settlement. Spot RGP prices have steadily moved lower throughout the month, now down about $.03/lb. So since at least spot monomer prices have begun to ease, might we see actually see lower Polypropylene prices ahead? It looks like it could happen.
The market could sure use the relief. Polypropylene sales have struggled around this key $.60/lb level of resistance. Even with a weak dollar, spot export sales cannot handle the price. While Polypropylene producers have been able to maintain their production margins, it has not really been a good market for either side: high monomer costs, high resin prices and weak domestic demand.
For several months, the monomer market has been teetering near its recent highs, appearing to be ready for a break. For this reason, buyers have been cautious, so there is not a huge amount of Polypropylene inventory throughout the supply chain. This also means that buyers do not have much bargaining power when looking for spot resin; they pretty much need to pay the asking price.
It seems however to look a bit more like a buyer's market developing. We are starting to see rail car offerings stick around longer than usual. Traders with inventory might be the best indicator because they are now shying away from new purchases and selling what they can.
Monomer contracts have been settling very early for the past several months. After this week plays out and the next begins, we should have a pretty good idea on the direction of the September Polypropylene market.
